For days there has been talk that Rudd would try to oust Australia’s Labor prime minister, Gillard.

The ill feeling between the pair goes back to June 2010 when Gillard toppled Rudd when he was prime minister. It was an unexpected political humiliation for Rudd, who eventually was appointed foreign minister.

Rudd, who has been attending the G20 conference in Mexico, told a news conference in Washington he would return to Australia, later this week, before deciding his future.

"The simple truth is I cannot continue to serve as foreign minister if I do not have Prime Minister Gillard's support. I therefore believe the only honorable thing, and the only honorable course of action, is for me to resign," said Rudd.

He has made no public pronouncements about any leadership ambitions he may harbor, but he ended his news briefing in the United States by asking his party colleagues who was best placed to win the next election.

Gillard’s minority government is struggling to regain voter support and opinion polls indicate that it would be thrown from office, if an election was held now. Australia's next national election is due in 2013.

The simmering tensions between Gillard and Rudd are dividing the governing Labor party.

Gillard loyalist, Member of Parliament Richard Marles, said the prime minister is the best person to lead the government.

“Julia Gillard will take us to the next election. She is doing a fine job. As I said, she is governing in what are very difficult circumstances for Australia. They're very difficult circumstances for the world. But she is governing in a way which has delivered this country the economy, which is the envy of the developed world,” said Marles.

However, Rudd’s supporters claim he has strong public support and is the only Labor politician capable of retaining power at the next election.

Australia’s conservative opposition leader, Tony Abbott, said internal fighting in the government has become “a soap opera” that is damaging the country.